2014 (1) TMI 1384 - HC - Central Excise

Waiver of pre deposit - Availment of CENVAT Credit - Appellant was directed to predeposit an amount of Rs.1crore out of the balance amount of cenvat credit still payable - Held that - The case of the revenue is that prior to restructuring of the tariff Ethyl Alcohol was an excisable goods as it found mention in the tariff but not after restructuring of the tariff - Tribunal has followed its earlier decision in the matter of Ugar Sugar Works Ltd. vs. Commissioner of Central Excise Belgaum 2007 (11) TMI 522 - CESTAT BANGALORE while dealing with the issue of Ethyl Alcohol manufactured using molasses as an input during the period from 1 July 2005 to 31 March 2006 - Therefore impugned order is set aside and direct the Tribunal to decide the stay application afresh - Decided in favour of assessee.

Summary

Issues involved:
1) Whether the Tribunal was correct in directing the appellant to deposit an amount for hearing the appeal when the issue is covered by previous Tribunal decisions?
2) Interpretation of Central Excise Tax Act 1944 regarding cenvat credit utilization for Ethyl Alcohol.
3) Applicability of Tribunal decisions in the case of Ethyl Alcohol manufactured using molasses as an input.

Analysis:
1) The appellant challenged the Tribunal's order directing a predeposit for hearing the appeal, arguing that the issue was covered by previous Tribunal decisions. The appellant contended that the Tribunal erroneously disregarded the previous decisions, which supported the appellant's position. The appellant sought a complete waiver of the predeposit based on the precedents set by the Tribunal in similar cases. On the other hand, the revenue supported the impugned order, stating that the deposit was only for the stay application stage and that the contentions would be considered during the final hearing. The High Court found that the issue required a fresh consideration by the Tribunal, directing a reevaluation of the stay application. Both parties were allowed to present their contentions before the Tribunal for a decision on the predeposit amount required for the appeal's consideration on merits.

2) The dispute revolved around the appellant's utilization of cenvat credit on duty paid for molasses in the manufacture of Ethyl Alcohol. The revenue contended that the credit on molasses could not be claimed for Ethyl Alcohol production as it was not subject to Central Excise levy but under State Excise. The Adjudicating authority upheld the demand for recovering the credit on molasses used in Ethyl Alcohol manufacturing. The appellant's appeal to the Tribunal sought dispensation from predeposit, which was partially granted by the Tribunal. The High Court highlighted the restructuring of the Central Excise Tariff Act in 2005, emphasizing the changes in the excisability of Ethyl Alcohol pre and post-restructuring. The Court directed the Tribunal to consider the applicability of previous decisions on Ethyl Alcohol production using molasses to determine the predeposit amount for the appeal.

3) The case involved the manufacturing process of Ethyl Alcohol using molasses as an input, raising questions about the utilization of cenvat credit and the excisability of Ethyl Alcohol. The Tribunal's previous decisions in cases related to Ethyl Alcohol production using molasses were cited by both parties to support their arguments. The High Court instructed the Tribunal to reconsider the stay application, taking into account the precedents set by the Tribunal in similar cases involving Ethyl Alcohol production post the restructuring of the Central Excise Tariff Act in 2005. The judgment emphasized the need to evaluate the applicability of previous decisions to the current case before determining the predeposit amount for the appellant's appeal on merits.